City Council approves tax break for businesses

Some local businesses received an early Christmas gift Wednesday when the Lubbock City Council approved a special tax break on business inventory that could cost the city up to $900,000.

Known as the freeport exemption, the new policy would extend tax breaks to goods, wares and merchandise stored in Lubbock for fewer than 175 days. The exemption is intended to boost economic development and heighten the city's allure to manufacturing and distribution businesses that may want to relocate here, said C. David Sharp, executive director of Market Lubbock Inc.

Sharp urged passage of the resolution and suggested the city make up for the loss in revenue by dipping into the newly created community investment fund.

By the end of the next fiscal year, the community investment fund is expected to have about $2.1 million, according to Assistant City Manager Debra Forte. The funds will come from one-percent contributions from the water, sewer and electric utilities and from cost savings in the city budget, she added.

The freeport tax exemption was a recommendation made by the city's Economic Development Task Force last month. Sharp said it is important for the city to have the exemption to stay competitive with other cities when competing for new jobs.

"It's important to get this on the books right away," Sharp said, noting that Market Lubbock is pursuing a manufacturing business and a warehouse distribution company for possible relocation or expansion in Lubbock.

"When we do not have (the freeport exemption) we get knocked off the list right away," Sharp said.

The proposal received strong support from council members with only Councilman Max Ince voting in opposition. Ince said he still has some detailed questions about the proposal but was unsuccessful in persuading his colleagues to delay the vote until after Christmas.

"This is a very big step for the city, and I just had some questions that staff did not have time to answer," Ince said.

One thing Ince wanted to know is the stance taken by the other major taxing entities, including Lubbock County and the Lubbock Independent School District.

But Councilman T.J. Patterson said there is no need to wait any longer on action that will promote job growth in the city.

"This will be an outstanding Christmas gift to our citizens," Patterson said. "Let's move forward and let the county follow us."

Councilman David Nelson said he views the freeport exemption as a tax refund for businesses seeking to expand the city's job base.

"This is an effort to give back money to them so they can use it in future economic development efforts," Nelson said.

Ince said he still will seek answers to such questions as which businesses will be eligible for the exemption and how many have already received tax breaks and economic development funds from the city. Also, Ince has asked for feedback from other cities that have the freeport exemption.

"I understand the need to take risks, but I am analytical in nature and I just want more information," Ince said.